1a.1: Implement the stimulus measures contained in Canada’s Economic Action Plan (EAP).

Implement the built-in “exit strategy” of the EAP by ensuring the temporary measures in the plan expire as scheduled by the end of 2010-11, to support the medium-term goal of returning to balanced budgets.

Canada’s EAP was adopted in Budget 2009 as a response to the deepest and most synchronized financial and economic crisis since the Great Depression.

Budget 2011 estimates show that more than $25 billion was delivered through the EAP in support for the recovery in 2010-11.  Overall progress in the implementation of the EAP during the year was presented in the 2010 Update of Economic and Fiscal Projections while progress in implementing individual measures contained in the EAP, as well as the job impacts, was assessed in the Sixth and Seventh Reports to Canadians.

Budget 2010 set out a three-point plan for returning to balanced budgets over the medium term which included winding down the stimulus provided in the EAP as the economy recovers.  The vast majority of the stimulus measures have effectively ended as planned on March 31, 2011, with only a small number of projects receiving an extension through October 31, 2011.  This will help ensure the return to balanced budgets over the medium term.

In 2010-11, the Department of Finance provided analysis and advice to support the introduction of tax measures announced in Budget 2011, which included new tax relief measures for individuals, families and businesses.  The work undertaken during this period also supported the Government’s decision to reaffirm its commitment to a low-tax environment that encourages the investment and job creation necessary to increase productivity and improve living standards for Canadians on an ongoing basis.

The new tax relief measures announced in Budget 2011 are in addition to actions taken since 2006 that have established a business tax advantage for Canada that is broad-based, fiscally durable and structurally sound.  As a result of federal and provincial tax changes announced since 2006, in 2013, most business income in Canada will be taxed at a combined federal-provincial rate of 25 per cent.  These tax changes have also allowed Canada to achieve an overall tax rate on new business investment that is substantially lower than that in any other G-7 country. 

In addition, work undertaken during the year led to the announcement in Budget 2011 of measures aimed at improving the fairness and neutrality of Canada’s tax system, including better aligning the deduction rates for intangible costs in the oil sands sector with rates in the conventional oil and gas sector and the closing of tax loopholes. 

The Department, through the Federal-Provincial Committee on Taxation, worked with provinces to achieve common tax policy objectives.

In January 2011, the Department released the 2010 edition of the Tax Expenditures and Evaluations report.  In addition to providing estimates and projections of tax expenditures related to the personal and corporate income taxes and the Goods and Services Tax, the report included two analytical papers entitled “Taxes and the Preferred Source of Corporate Finance” and “The Response of Individuals to Changes in Marginal Income Tax Rates”.

In 2010-11, the Department continued to focus on providing timely, accurate payments of Canada Health Transfer (CHT) and Canada Social Transfer (CST) amounts to provinces and territories. 

In addition to growing support for the CHT and CST, $525 million was provided through one-time payments to ensure provinces are protected from any decline in their total transfers (CHT, CST and Equalization) in 2010‑11 in recognition of the short-term challenges being faced by provinces as we emerge from the global recession.

Communications activities, including outreach with the provinces, continued in 2010-11 to improve overall understanding of the programs.

In 2010-11, the Department continued to focus on providing timely, accurate payments of Equalization amounts to Equalization-receiving provinces and Territorial Formula Financing (TFF) amounts to territories. 

Communications activities, including outreach with the provinces, continued in 2010-11 to improve overall understanding of the programs.

Finance Canada officials managed and supported the successful implementation of the Canada Pension Plan (CPP) 2007-2009 Triennial Review changes agreed to by Finance Ministers in May 2009.  These changes to the CPP included measures to better reflect the way Canadians live, work and retire, such as providing greater flexibility for those taking up the retirement benefit before the age of 65 to enable them to combine their CPP benefit with work.

Steps taken in 2010-11 to support implementation included:

• Creating the new CPP regulations needed to implement the changes arising from the 2007-2009 Triennial Review.
• Working with provinces to obtain formal provincial consent on legislative and regulatory changes.  (Changes to the CPP require the formal consent through orders in council from two-thirds of the provinces with two-thirds of the population of Canada.)
• Once formal consent was obtained, Finance Canada officials prepared submissions to the Treasury Board to demonstrate that the required provincial consent had been obtained.  Finance Canada’s Order in Council bringing the CPP changes into effect was published in the Canada Gazette on August 18, 2010 (PDF 1.58 Mb).
• Working with Human Resources and Skills Development (HRSD) officials to ensure Canadians have access to information on the CPP changes.

The CPP changes were in place as of January 1, 2011.

Finance Canada officials worked with provincial and territorial officials, as well as with other federal departments, to analyze options for ensuring the ongoing strength of Canada’s retirement income system.  This was done through:

• A national consultation on options for ensuring the ongoing strength of Canada’s retirement income system for which Finance Canada officials prepared the supporting consultations materials.
• Providing the federal Minister of Finance and other federal Ministers, as well as provincial and territorial Finance Ministers with advice and analysis on options to ensure the ongoing strength of the retirement income system.
• Following up on the directions of FPT Finance Ministers on options to ensure the ongoing strength of the retirement income system, including preparation of a report with options for a modest enhancement of the CPP.

In addition to the work on CPP, Finance Canada officials have worked with provincial and territorial officials to implemented the commitment from the December 2010 Finance Ministers’ Meeting to introduce Pooled Registered Pension Plans (PRPPs).  These will be defined contribution pension plans that will improve the range of retirement saving options by providing an accessible and low-cost pension plan for individuals who currently do not participate in a private pension plan, such as the self-employed and employees of companies that do not offer a pension plan.

Steps taken in 2010-11 to introduce PRPPs included:

• Creating a working group of federal, provincial and territorial officials to further develop the PRPP framework.
• Holding PRPP stakeholder consultation sessions with government officials and industry representatives in Toronto and Ottawa to solicit views on the development of the PRPP policy.
• Encouraging industry stakeholders to prepare written submissions to further input into the policy development process. 

Finance Canada officials began preparing advice and analysis for federal, provincial and territorial Ministers of Finance on directions for the next 2010-12 CPP Triennial Review.

Finance officials supported federal, provincial and territorial Ministers of Finance by providing advice and analysis on :

• the financial sustainability of the CPP, based on the 25th Actuarial Report on the CPP, which was tabled on November 15, 2010; and,
• other changes that may be needed to the CPP, based upon:
  1. direction from FPT Ministers of Finance regarding analytical work on a modest CPP expansion; and,
  2. regular discussions with provinces, territories, and other federal departments and agencies such as HRSD and OSFI.

The Department continued to evaluate research and proposals concerning potential environment-related tax measures in consultation with other government departments and stakeholders, including taxpayers, industry associations, and environmental organizations.

Analysis conducted during the year included work supporting the announcement in Budget 2011 of an expansion of the accelerated capital cost allowance (CCA) for clean energy generation equipment under Class 43.2 to include equipment that generates electricity using waste heat.  The Department also conducted analysis supporting the announcement in Budget 2011 of the extension of the qualifying environmental trust rules to pipelines.

The Department performed analysis that lead to the Budget 2011 measure reducing the deduction rates for intangible capital expenses in oil sands projects to align them with the rates in the conventional oil and gas sector.  This measure supports the commitment by G-20 Leaders to rationalize and phase out over the medium term inefficient fossil fuel subsidies.

The Department finalized the legislation implementing the phase-out of accelerated CCA for general investments in oil sands projects announced in Budget 2007.  The Department also finalized the regulations implementing the Budget 2008 and Budget 2010 announcements broadening the eligibility criteria of the CCA Class 43.2.  The Department worked on developing draft legislation to enact the changes to CCA Class 43.2 and the changes to the qualifying environmental trusts rules announced in Budget 2011, which were released with Budget 2011. 

4d.6: Green procurement training – Ensure that proportion of material managers and procurement staff who have received green procurement training remains at 100 per cent by providing green procurement training to all new managers and staff within 8 months of arrival. 

Deliver green procurement training to 70 per cent of acquisition card holders by March 2011.